<THE FOOL PORTFOLIO>
Plus, Rule Breaker announces buy
by Rick Aristotle Munarriz (TMF Edible)
MIAMI, FL (Dec. 3, 1998) -- Dead canaries anyone? Back in the days when coal mining ran supreme avoiding the toxic fumes was simple. The miners would send in a canary first. As long as the bird was chirping away in darkened paradise it was "Heigh Ho, Heigh Ho" and off to work they'd go. That is why, cautiously, I climb into the recap tonight and find slivered limbs of Rule Breaker workhorses Amazon.com (Nasdaq: AMZN) and America Online (NYSE: AOL) strewn about. Lifeless. Stripped of pulse as of two days ago.
The living remains are now seemingly incomplete. Oh, the horror. Oh, the humanity. The other casualties include KLA-Tencor (Nasdaq: KLAC), Innovex (Nasdaq: INVX), and 3Com (Nasdaq: COMS) -- unfortunate carcasses all, but these three canaries never carried much of a tune anyway.
So, how dare I raise a pick knowing that 20% stakes in the two most vibrant holdings have been offed? Is that a hardhat that I'm wearing or simply me being hardheaded again? I think I've grown immune to the difference. I'm being waved in yet I don't feel safe here.
The AOL and Amazon.com sales have added back about $28,500 each to the portfolio coffers, but what does this mean to me? How many questions can I ask in a forum where many come looking for answers? Canary? Canary, where are you? Come home and sing for me.
I do not think they will sing for me. Oops, a Prufrock moment:
"In the room the Wise come and go, Talking of Mario Gabelli-o."
Send T.S. Eliot my apologies, I'm still stuck here in the cavernous dark. Hope and embers flicker as I try to make sense of this. I know the market was cruel today, as the Rule Breaker Port shed 2.63% of its value. That was a bit worse than the 1.8% decline in the S&P 500 and the 2.05% tumble in the Nasdaq Composite. Amazon.com, which fell $10 a share yesterday, lost another Hamilton greenback today. Internet stocks are taking what Wall Street pundits would call a breather. Sure, go ahead, mock these lifeless canaries. Then again, while we are not about market timing, being 140 and 320 shares lighter of Amazon.com and AOL, respectively, over the last two days has spared us $4,640 of carnage.
Still, the partial sale consumes me. That is until I peek back at November. Our then 1420 shares of AOL appreciated by a little more than $34,000 last month. For Amazon.com you don't even need a monthly calendar. On November 19 and 20 the stock of the online merchant shot up $64 3/4, for a $37,555 gain on our 580 shares.
Suddenly cashing out on smaller sums seems trivial. We sold an AOL November and 48 hours of Amazon.com with change to spare. As a matter of fact, on a dollar basis we have a larger stake in both companies, today, than we did a month ago. The upside is that we now have $89,444 in idle cash. For now.
I think back to how I was a bit confused back when the April, 1997, decision to trim AOL and Iomega (NYSE: IOM) was made. Did it make sense? Iomega is much lower today. AOL is much higher. Was it a draw? Of course not. Those proceeds went right back to work. Two weeks later a successful short of Trump Hotels & Casino (NYSE: DJT) ensued. Five months later Amazon.com was bought. We're miners, right? We dig until we discover the undiscovered, no? That's it! Finally! A smile breaks through my ashen face. You have to let your winners run, but you also have to stash some funds away to give your new sprinters running shoes.
Rule Breakers are coming.
As fate would have it, we're announcing one right now! You don't have to travel far at all because this one is @Home (Nasdaq: ATHM). With the only thing holding back the popularity of the Internet (beyond accessibility) being speed, here is a company looking to rev up your online experience. After reading tonight's BUY REPORT, you might want to head on over to the new Rule Breaker Portfolio message board to discuss the newest hatchling. Or maybe you want to go straight to the @Home message board itself. Can you hear the chirping again? Maybe they will sing for me after all. Fresh canaries spreading their wings -- and, oh, what a melody they will play.
Order your copy of David and Tom Gardner's new book, Rule Breakers, Rule Makers, in advance. This Simon & Schuster beauty doesn't arrive until January, but you can reserve your copy today! The first half of the epic book, on Rule Breakers, elucidates the Fool Port's investment style; the second half, on Rule Makers, further explains Cash-King investing.
WE DELIVER - Get Fool Portfolio Nightly Reports
delivered straight to your e-mailbox every evening!
Day Month Year History Annualized FOOL -2.63% -0.94% 105.09% 588.29% 56.15% S&P: -1.80% -1.16% 18.52% 150.90% 23.68% NASDAQ: -2.05% 0.25% 24.45% 171.37% 25.94% Rec'd # Security In At Now Change 8/5/94 1100 AmOnline 1.82 84.00 4521.22% 9/9/97 440 Amazon.com 19.74 189.50 860.09% 5/17/95 1960 Iomega Cor 1.28 7.31 471.11% 10/1/96 84 LucentTech 23.81 88.25 270.67% 8/12/96 130 AT&T 39.58 62.19 57.13% 4/30/97 -1170*Trump* 8.47 4.75 43.91% 2/20/98 200 Exxon 64.09 70.50 10.00% 2/20/98 215 DuPont 59.83 54.75 -8.50% 2/20/98 270 Int'l Pape 47.69 43.44 -8.92% 7/2/98 235 Starbucks 55.91 48.81 -12.69% 1/8/98 425 3Dfx 25.67 13.13 -48.87% Rec'd # Security In At Value Change 8/5/94 1100 AmOnline 1999.47 92400.00 $90400.53 9/9/97 440 Amazon.com 8684.60 83380.00 $74695.40 5/17/95 1960 Iomega Cor 2509.60 14332.50 $11822.90 10/1/96 84 LucentTech 1999.88 7413.00 $5413.12 4/30/97 -1170*Trump* -9908.50 -5557.50 $4351.00 8/12/96 130 AT&T 5145.11 8084.38 $2939.27 2/20/98 200 Exxon 12818.00 14100.00 $1282.00 2/20/98 215 DuPont 12864.25 11771.25 -$1093.00 2/20/98 270 Int'l Pape 12876.75 11728.13 -$1148.63 7/2/98 235 Starbucks 13138.63 11470.94 -$1667.69 1/8/98 425 3Dfx 10908.63 5578.13 -$5330.50 CASH $89444.18 TOTAL $344144.99
</THE FOOL PORTFOLIO>